Economic Growth And Mother Nature

Economic growth
and Mother Nature
The ideology of growth, suggests Jonathon Porritt, is at the
centre of today's pollution in the West. He goes on to argue that
plans for economic growth in the developing world, as essential
for national virility as the President's jet, have locked
states into a debt crisis and ecological catastrophe.
But the economic disease may not be terminal...

'WHERE there's muck there's brass'; ironically the new 'eco-industries' are one of today's healthiest growth sectors. The very process of generating wastes and pollution has created many cleansing technologies: equipment to remove sulphur emissions from smokestacks, catalytic converters - exhaust purifiers - for cars, recycling of domestic and industrial waste, even the humble bottle bank. In an astonishing spasm of technological rearmament, industrialists like those of Mining & Manufacturing of Minnesota (3M) have found ways of creating new markets and increased profits out of cleaning up their own mess. One person's pollution becomes the next person's profit.

Some claim this as an achievement for the environment movement. But in reality it is a Pyrrhic victory if it has diverted attention from our central concern: that the single-minded pursuit of economic growth, as measured by increased levels of gross national product (GNP), has undermined the livelihood of millions and now threatens us with social, moral and ecological bankruptcy.

It has been said many times before, but there is no option but to go on saying it. The false imperative of maximising production and consumption has throttled alternatives. 'Growthism' is a super-ideology, uniting all shades of the political spectrum in one assumption: that growth is good and more growth is therefore better. The tragedy is that almost all the voices of dissent have gradually been sucked into this consensus. Academics, the media, even the established Church, all bend the knee at the right place and the right time. The Left is no better than the Right, and the centre is the worst of the lot. Perhaps it is the trade unions that best epitomise this breakdown of dissent. There is great concern among unions about many environmental and social issues such as tighter controls on pollution, better forms of participation and a more humane society. But this does not reduce their rock-solid support for today's fundamental economic goal - more growth. It's trying to have your cake and eat it, and it can't be done.

Perhaps this is not surprising, for conventional economics does not provide a proper cost/benefit analysis of economic growth. And so the annual increase in GNP remains the only major indicator of our economic welfare. GNP is an inadequate yardstick because:

· Annual growth rates of GNP give no indication whether this can be sustained. When today's consumption destroys the resources on which tomorrow's production depends, then our welfare is being undermined rather than enhanced. Look at the UK. Pumping out North Sea oil as fast as possible for the world markets, taking no heed of the weak petroleum prices, has brought in foreign exchange to allow British GNP figures to edge upwards over the last few years. It's as if there were no tomorrow, as if the wells were inexhaustible. In fact knowledgeable estimates give them a life expectancy of five to ten years.

· Annual growth of GNP is no genuine measure of efficiency. Modern farming, highly mechanised and dependent on oil-derived inputs, is one of the least efficient systems in the world if measured in terms of energy used to produce a given output of calories. But when measured in purely monetary terms, such farming generates huge profits and contributes significantly to the growth of GNP.

· Annual growth of GNP doesn't indicate just who is doing well, An increase in luxury consumption can certainly stimulate GNP growth rates, while poor people are becoming worse off. And the emerging catch-phrase of the late 1980s, 'jobless growth', shows how success in a modern industrial nation can depend on high levels of permanent unemployment.

· Annual growth in GNP cannot discriminate between the genuine benefits of industrial production and the costs. If the costs are not measured by money, they are ignored. If they cost money they are included in GNP and held up as benefits. Increased spending on clearing up pollution, on handling multiple pileups on freeways and patching up the victims of crashes, on transfer fees for sports stars; it's all counted in, as if these were positive contributions to our welfare.

· Annual growth in GNP dismisses all the work done in the informal part of the economy. Yet the informal sector provides through her diagram of the economic activity. As the US environmentalist and TV personality Hazel Henderson illustrates through her diagram of the many-layered cake (see illustration) this is not some peripheral part of the economy. It includes both the cash-in-hand transactions of the black economy and all the unpaid work done in households, communities and voluntary organisations. Henderson's analysis of the deficiencies of growth-orientated economics goes further; 'The social costs of a polluted environment, disrupted communities, and disrupted family life may be the only part of GNP that is growing.'1

German economist Christian Leipert refers to these costs as 'defensive costs', and has shown in the West German economy how damage control and repair are now propping up a declining industrial base by providing new mechanisms for growth. One is reminded of that Laurel and Hardy movie where the bumbling incompetent workmen are called in to mend a leak in the plumbing, and in the process succeed in destroying the whole house. The job gets done - but at what cost?

Ecologists have been heavily criticised over the last decade because some of their gloomier forecasts of the early 1970s - that many of the earth's resources would be exhausted within the decade - have not come true. Both the planet and the industrial systems that feed off nature have been more resilient and adaptable than we might have expected. But the basic ecological analysis is irrefutable. Remember that a three per cent annual growth rate means a doubling of production and consumption every 25 years. If we go on using up our non-renewable resources like that, as well as fouling and abusing our renewable resources like clean air or water, then the system must eventually break down. Those who claim because it hasn't broken down yet is somehow proof it never will, are either idiots or liars.

For millions of people, the system already has broken down. In much of the developing world attempts to progress through industrial growth have been bitterly disappointing. Such benefits which have occurred, have largely been confined to a privileged minority. Between 1950 and 1980 real per capita income for the 800 million people in the world's poorest countries grew by a mere $80. Over the same period in the industrialised countries it rose by $6,000.2 And the gap is getting bigger. Yet many world development activists and thinkers still believe that the solution to Third World poverty lies in the pursuit of higher growth and increased world trade. But previous growth-orientated policies have imposed a burden of foreign debt on many countries which is leading to ecological catastrophe. For to service their debt, they have no option but an 'export-or-die' approach (see table on debt repayments). Those with few exports apart from agricultural produce will see their best land given over to cash crops, while subsistence food farmers are pushed onto the more marginal land nearer the desert or up steep hillsides where the soil is washed or blown away. Brazil is the second largest exporter of agricultural produce in the world, yet 60 per cent of the Brazilian population is estimated to be suffering varying degrees of malnutrition.3

And it's not just the soil which suffers: forests, seas, minerals and every imaginable raw material is ferociously mined to repay our Western banks. As commodity prices fall - the collapse of such prices between 1980 and 1982 caused developing countries an aggregate loss of export earnings amounting to $21 billion2 - and interest rates on loans stay high (each one per cent increase over the last decade has added $6 billion to the annual debt service bill of the developing countries), they are obliged to mine their country's natural resources ever more ruthlessly, just to stand still.

Poverty is the root cause of the impending ecological catastrophe. That poverty is the direct consequence of today's world economic order, and economic growth is the lynch-pin of that order. That is why we must stop talking about economic growth per se being necessary for the Third World even if we don't need it for ourselves, and go back to basics. What kind of growth? For whom? And to what end? It is now a full decade since the Dag Hammarskjold Foundation published the booklet Another Development.

The five principles outlined ,now making something of a comeback, emphasise that development should be:

1. Needs-orientated, meeting people's physical and spiritual wants;

2. Self-reliant, with every society relying primarily on its own resources to meet its needs;

3. Ecologically sound, recognising and working within the 'outer limits' of a finite biosphere;

4. Pluralist, with many different development patterns respecting the diversity of the world's cultures and value structures;

5. Participatory, with a return to small human-scale, self-management and appropriate technologies.

The principal components are clear. Successful development lies not in maximising the flow of energy and raw materials through the economy but, on the contrary, in the way it delivers the culturally demanded standards of living with the minimum call on mineral, energy and other environmental resources. Unfortunately many formulations of this alternative approach have withered under the obsession with GNP. Until the hidden costs of growth are clearly seen on the agenda, people will continue to accept GNP as the only measure of human welfare. We urgently need alternative measurements of such welfare.

A range of ideas for alternative indicators have been developed over the last years which deduct the social and environmental costs rather than adding to them. The Japanese system of 'Net National Welfare' which deducts certain kinds of environmental damage and resource depletion, is one. The US Overseas Development Council has for a long time been using the Physical Quality of Life Indicator based on the figures for life expectancy, infant mortality and literacy in a country.

However as yet no alternative indicators have really caught on, either because they are more complex than good old GNP, or because politicians feel pathetically insecure when they cannot promise growth. Now the tail wags the dog. People have been persuaded that the path to the good life lies in ever increasing consumption, so that political leaders dare not suggest an alternative route.

The 'Adjusted National Product' of Christian Leipert gives economists and politicians a nudge in the right direction. It draws up a balance sheet which includes the real costs and benefits of production. All 'defensive' or negative spending is deducted from current measurements of GNP. Though often speculative, figures can be derived to cover the whole range of social, human and ecological costs, from acid rain and dead forests to ill-health caused by cigarette smoking.

It would be easy to dismiss such alternative indicators. Those who promote the myth of revolution to redress the world's disparities are unlikely to be impressed by the idea of a change from Gross National Product to Adjusted National Product as the way forward. Yet without the development and adoption of such alternatives, many of the hopes of the development movement and the green movement will remain just that. The dominance of GNP and economic growth in our thinking is the single most important obstruction to our industrial economies making the transition from production for profit to production for need.

Our economic cake

Top layers This is the section measured by Gross National Product; everything with a price. It generates all economic statistics. However there is a grey area of undeclared monetary transactions based on tax-dodging and other criminal activities.

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Bottom layers Unmeasured, non-monetary section of the economy. This involves sharing and altruism. It bolsters the GNP cash sector with unpaid work and unaccounted for environmental degradation.

Developing countries debt service payments

The first figure indicates what each of the countries below owed as of late 1983; the second indicates their debt service ratio i.e. the repayment of debt and interest as a percentage of exports of goods and services.

Country

Debt
($US billions 1983)

Ratio (percentage)

Brazil

80

58

Mexico

79

47

Argentina

31

40

South Korea

27

16

Venezuela

15

21

Indonesia

25

14

Philippines

14

29

Turkey

19

32

Algeria

16

41

Chile

16

49

Peru

9

22

Morocco

10

42

So Brazil had to repay more than half the foreign exchange it earnt in 1983, to overseas lenders. Morocco had to repay 43 per cent of all its export earnings that year.

Source Handbook of International Trade and Development Statistics, 1985 (UNCTAD)

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